Damning reports in the Times this weekend accused agents of overvaluing properties leading to increased numbers of price reductions throughout the UK market. Based on analysis from Zoopla, the research showed that a third of properties on the market saw a price reduction ahead of a successful sale and made claims that agents are ‘misleading’ sellers.
Mark Peck, Head of Residential, gives his view:
"There are certainly two sides to every story, however the scale and breadth of overvaluations in today’s market is indeed proving a problem for sellers. Agents overvalue for a series of reasons; inexperience, lack of understanding of the market or simply to win an instruction. The reality is that there are parts of the market throughout the UK which have certainly seen reductions in values over the past two or three years, however this fact is often ignored by sellers who believe that their house should have seen enormous price growth, in spite of conditions. Similarly, some of the less experienced agents in the market are still trying to value as if the property market is still in the midst of its bull run of the past four or five years. By tying sellers into lengthy and stringent contracts, rogue agents look to win the instruction and then recommend price reductions to more realistic level during the selling period, knowing that if they had recommended a realistic price in the first place they wouldn’t have won the instruction. In places such as London and the South East where prices have stalled and even fallen in some situations, properties can end up sitting available at the wrong price whilst the surrounding market sees falling values, price reductions then have to be sizeable in order to chase the market down until the house reaches the correct level.
Unfortunately, flattery also comes into play here with many sellers simply instructing the agent who gives them the highest valuation. In reality, motivated sellers need to ensure that their properties are priced correctly as increases in stock continue to allow buyers to drive market fluctuations. Overpricing has been the killer for some homes on the market and sellers who are realistic on the value of their home can now reap the benefits of active buyers in the market with houses which have been realistically priced and correctly marketed still seeing large viewing numbers, offers and in some situations, sealed bids. Similarly, once sellers find a buyer for their home, this market allows more negotiating room on their onward purchase and possibilities to pick up a bargain at the other end of the transaction.
Sellers should look to instruct well-established agents who have a strong presence in the local area. Fluctuations in values can vary from street to street in some cases, so comparable evidence and real experience of the local town or village is now essential when it comes to getting the price right. Ask your agent for evidence of properties which they have sold in particular, not their competitors and recent comparables, and these need to be really up to date, not ones from months previously. Experience here is all important and those agents who have weathered the storms of property cycles previously and will know how to handle the current market. Should vendors find themselves in the situation of needing to reduce the price of their property, our advice would be to drop the value by enough to bring in a new set of buyers at a new price range. The mistake often made by sellers is to reduce the price on consecutive occasions which can have a damaging effect and put buyers off. It is much more sensible to significantly reduce to a rounded figure within a different price bracket and then bring in higher levels of interest, hopefully to generate competition between buyers.”